IMF, Berlin still divided over Greek debt but progress in sight

A meeting of the so-called Washington Group – representatives of Greece’s creditors as well as the governments of Germany, France, Spain and Italy, the biggest eurozone economies – failed to break a deadlock over the Greek debt as the International Monetary Fund and Berlin remain divided on the length of an upfront extension on bailout loans.

The Washington Group meeting coincided with the Eurogroup in Brussels, where eurozone finance ministers were expected to ratify the staff-level agreement (SLA) between Greece and its creditors and pave the way for a bailout exit in August.

Despite the disagreements between Berlin and the IMF over Greece’s debt, senior officials reckon that both sides are showing some flexibility, albeit limited.

With the clock ticking, negotiations on the matter are expected to continue in the coming days, as the IMF wants to know what sort of debt relief measures will be granted to Greece before the end of the month, so its board can decide whether or not it will participate in a Greek program.

A decision might be made at the G7 leaders’ summit in Canada in early June when the main players involved in the Greek program will meet. The IMF has said it will not take part in the program if Greece’s debt is unsustainable.

According to Eurogroup President Mario Centeno, the IMF’s participation is “significant.”

Speaking to reporters before Thursday’s Eurogroup, Centeno said the decision on whether the IMF will get on board is “close.”

He also hailed the SLA as “great news” for Greece as a package of reforms was agreed that will be implemented in the coming weeks.

For his part, European Commissioner Pierre Moscovici said Greece was on the final stretch to exit the bailout. He said the target is to complete the program on June 21, so that “we can say in August that Greece is out of the program” after a 10-year crisis.